Form 4: Redmile Group Acquires 55,000 FATE THERAPEUTICS Stock Options for Board Service

Redmile Group, LLC, a significant shareholder and director of FATE THERAPEUTICS INC, has reported the acquisition of 55,000 stock options for common stock at an exercise price of $1.32, granted in connection with Michael Lee's board service.

Summary

• Redmile Group, LLC and Jeremy Green, the principal of Redmile, are identified as reporting persons, holding roles as Directors and 10% Owners of FATE THERAPEUTICS INC.
• On May 29, 2025, a stock option to purchase 55,000 shares of FATE THERAPEUTICS INC common stock was acquired.
• The exercise price for these stock options is $1.32 per share.
• The option is set to vest in full and become exercisable upon the earlier of May 29, 2026, or the Issuer's 2026 Annual Meeting of Stockholders, contingent on Michael Lee's continued service on the board of directors.
• The expiration date for the stock option is May 29, 2035.
• Michael Lee, a managing director of Redmile, received this award for his service as a board member, but holds it as a nominee for Redmile, having assigned all economic, pecuniary, and voting rights to Redmile.
• Redmile Group and Jeremy Green disclaim beneficial ownership of the equity award except to the extent of their pecuniary interest therein.
• The reporting persons are considered directors by deputization for purposes of Section 16 of the Securities Exchange Act of 1934, as Michael Lee was elected to the board as a representative of Redmile and its affiliates.

Sentiment

Score: 7

Explanation: The acquisition of stock options by a significant shareholder and director is generally a positive signal, indicating alignment of interests and confidence in the company's future. The low exercise price suggests potential upside. There are no negative financial implications directly from this filing.

Positives

• A significant shareholder and director, Redmile Group, is receiving equity compensation, which aligns their interests with the company's long-term performance and shareholder value creation.
• The exercise price of $1.32 for the stock options is relatively low, suggesting potential upside for the holder if the company's stock price increases.

Risks

• The vesting of the 55,000 stock options is contingent upon Michael Lee's continued service on the board of directors through the specified vesting date, introducing a dependency on his tenure.
• The ultimate value of the stock option is directly dependent on the future market performance of FATE THERAPEUTICS INC's common stock, which is subject to market fluctuations and company-specific risks.

Future Outlook

The vesting schedule of the stock option, tied to Michael Lee's continued board service until at least May 29, 2026, indicates an expectation of his ongoing involvement in the company's governance and strategic direction.

Management Comments

• "The stock option will vest in full and become exercisable upon the earlier of (i) May 29, 2026 or (ii) the date of the Issuer's 2026 Annual Meeting of Stockholders, subject to Michael Lee's continued service on the board of directors of the Issuer through the applicable vesting date."
• "The stock option award was granted to Mr. Lee, a managing director of Redmile Group, LLC ('Redmile'), in connection with his service as a member of the board of directors of the Issuer."
• "Pursuant to the policies of Redmile, Mr. Lee holds this equity award as a nominee on behalf, and for the sole benefit, of Redmile and has assigned all economic, pecuniary and voting rights in respect of the equity award to Redmile."
• "Mr. Lee disclaims beneficial ownership of the equity award, and the filing of this Form 4 shall not be deemed an admission that Mr. Lee is the beneficial owner of the securities for purposes of Section 16 of the Securities Exchange Act of 1934, as amended, or for any other purpose."
• "The stock option award may also be deemed beneficially owned by Jeremy Green as the principal of Redmile. Redmile and Mr. Green disclaim beneficial ownership of the equity award except to the extent of their pecuniary interest therein, if any, and this Form 4 shall not be deemed an admission that Redmile or Mr. Green is the beneficial owner of the securities for purposes of Section 16 of the Securities Exchange Act of 1934, as amended, or for any other purpose."
• "Mr. Lee, a member of the board of directors of the Issuer and a managing director of Redmile, was elected to the board of the Issuer as a representative of Redmile and its affiliates. As a result, the Reporting Persons are directors by deputization for purposes of Section 16 of the Securities Exchange Act of 1934, as amended."

Industry Context

This Form 4 filing details a routine equity compensation grant to a board member who also represents a significant institutional investor. This practice is common across industries, particularly in biotechnology, to align the interests of key stakeholders and ensure long-term commitment from board members who are also substantial shareholders.

Comparison to Industry Standards

• Granting stock options to board members, especially those representing significant shareholders, is a common practice in the biotechnology and pharmaceutical industries, similar to compensation structures observed at companies like Gilead Sciences or Amgen for their non-executive directors.
• The exercise price of $1.32 is typical for options granted at or near the market price on the grant date, which is a standard approach for aligning director incentives with shareholder value creation.
• The vesting schedule (one year or next annual meeting) is also a standard practice for director equity awards, ensuring continued commitment and long-term alignment.

Management Changes

Corporate Governance

Related Party Transactions

• The stock option award was granted to Michael Lee, a managing director of Redmile Group, LLC, which is also a 10% owner and has a director (Michael Lee) on the board. This constitutes a related party transaction as compensation is provided to an individual affiliated with a significant shareholder and board member.

Stakeholder Impact

• Shareholders: The grant of stock options to a director representing a significant shareholder aligns the interests of Redmile Group with other shareholders, potentially encouraging decisions that enhance long-term stock value. However, it also represents potential dilution upon exercise of the options.
• Management/Employees: Michael Lee's continued service on the board is incentivized by the vesting schedule of the options, which could contribute to leadership stability.

Next Steps

• The stock option will vest upon the earlier of May 29, 2026, or the Issuer's 2026 Annual Meeting of Stockholders.
• Michael Lee's continued service on the board of directors is required for the option to vest.

Key Dates

Keywords

SEC Form 4, FATE THERAPEUTICS, FATE, Redmile Group, Jeremy Green, Michael Lee, Stock Option, Beneficial Ownership, Director Compensation, Equity Award, Insider Transaction, 10% Owner, Corporate Governance